Frontier Group (ULCC) Barclays 43rd Annual Industrial Select Conference summary

Market environment and revenue trends

• Airline demand environment has improved, with constructive supply-demand dynamics and disciplined pricing strategies in place.

• Q1 saw a 10% year-over-year improvement in stage length adjusted RASM, with positive trends expected to continue into March and beyond.

• Capacity is slightly down in January and February but will grow 8% in March, with March expected to deliver the strongest year-over-year revenue gains.

• Half of the RASM improvement is attributed to market dynamics, and half to internal initiatives, including enhanced product merchandising and NDC adoption.

• Load factors are recovering without sacrificing fares, and booking curves are improving, supporting higher conversion and attachment rates.

Strategic initiatives and operational changes

• Fleet is being right-sized by removing 24 aircraft through a deal with AerCap, reducing ownership costs and aligning with operational needs.

• Growth profile adjusted to 8%-10% annually, with a target to increase aircraft utilization from under 9 hours to 11.5 hours over 18-24 months.

• Deferred 69 Airbus aircraft deliveries from 2027-2029 to 2031-2033, aligning fleet growth with new targets and reducing PDP requirements by $170M-$210M.

• Cost discipline measures include $100M rent reduction and $60M-$70M in efficiency gains from improved utilization and network optimization.

• Focus on operational reliability, with projects to improve on-time performance, optimize maintenance, and reduce cancellations.

Product, network, and loyalty program developments

• Enhanced product merchandising via NDC allows customers to purchase bundles directly through OTAs, improving conversion and ancillary revenue.

• Loyalty program investments have driven 30% year-over-year cash flow growth in Q4, with further enhancements planned, including a new first class seat and Wi-Fi by 2027.

• Network adjustments delayed due to fleet right-sizing, with capacity refinements expected in Q2; strong performance seen in Atlanta and western US markets.

• Overlap with a major competitor is decreasing, creating structural advantages and opportunities in markets where competitors have reduced capacity.

• First class product rollout is on track for fleet-wide installation by year-end, transitioning from the current UpFront Plus offering.